Eastman Kodak Co. expected to save thousands of dollars a year when it laid off Maryellen Ford in a companywide downsizing. Within weeks, however, it was paying more for the same work. A local contractor that gets much of its work from Kodak snapped up Ms. Ford, a computer-aided designer and 17-year Kodak veteran. “I took the project I was working on and finished it here,” she says. Instead of paying her $15 per hour plus benefits, Kodak now pays the contractor $65 per hour, and Ms. Ford earns $20 an hour

(but gets no benefits). A Kodak spokesman acknowledges that the photography and imaging company has to outsource work during peak periods and adds, “There are a lot of challenges facing the company. People throughout the company are working a lot harder, but I’m not hearing that they’re demoralized.” He also says that by reducing staff, Kodak has saved money in computer equipment and workspace.” Explain what protbooka plabce lat yKod ak.

How would you determine whether Kodak has improved .

its efficiency by downsizing? GS -/S = SO 4 Explain the following comment: Cost cutting has become the holy grail of corporate management, but what helps the financial statement up front can end up hurting it down the road.

onnecticut Mutual Life Insurance offered a lucrative uyout plan to its 1,675 workers. About 900—more than twice the anticipated number—accepted, forcing it to fill 400 vacated positions. Senior employees were the ones who left, and the company brought in new entrants at the lower end of the wage scale. The company estimates it will save $10.4 million per year, What are the trade-offs and implications associated with this decision to restructure the workforce?